December, 2008

The Good ‘Ole’ Carry Trades

Iceland’s Role in the 2007-2008 Financial Crisis
Posted by Herb Addison, Leo M. Tilman, December 29th, 2008, 8:16pm

What do subprime mortgages, structured investment vehicles, CDOs, and the country of Iceland have in common? In the prelude to the ongoing financial crisis, they all served as powerful agents that helped wind up the worldwide spring of leverage to an unprecedented extent. Moreover, their respective roles in that vicious circle of risk-taking were surprisingly similar, all related to one of the most notorious investment construct and pieces of the Wall Street jargon – the carry trade.


Seeking to Adapt

Goldman Sachs & Morgan Stanley Take Alternative Routes to Retail Banking
Posted by Herb Addison, Leo M. Tilman, December 27th, 2008, 5:14pm

The recent conversion of Goldman Sachs and Morgan Stanley into bank holding companies was more than just a necessary means of getting access to Federal funding. It was an acknowledgement that the business model of independent investment banks was no longer viable. Now, both companies are focusing on retail deposits – and taking very different routes to the destination, very much in the spirit of Financial Darwinism.
Financial Darwinism explores the origins, drivers, and implications of the ongoing tectonic financial shift. It then equips executives and investors with actionable approaches to creating lasting economic value amidst complexity and uncertainty.